real estate business plan in kenya pdf

Real estate business plan in Kenya

Prepared by Fred M’mbololo Page 1

BUSINESS PLAN

A HOUSING REAL ESTATE IN KENYA.

Prepared by Fred M’mbololo Page 2

Table of contents:

1.0 Executive Summary

1.1 Objectives of the Real Estate Project.

1.2 Vision Statement

1.3 Mission Statement

1.4 Target Market

1.5 Swot Analysis

1.6 Start up financial summary notes

1.7 The People Needed

1.8 Sales Strategy

1.9 Profit Margins and Overheads

1.10 Important Assumptions

2.0 Reasons to invest particularly in the Housing Sector in Kenya.

2.1 Kenyan’s General Prospects

2.2 An overview of the Kenya Vision 2030

Prepared by Fred M’mbololo Page 3

1.0 Executive Summary:

The Proposed Real Estate organization will be based in Nairobi County or some few kilometers nearby.

The Organization will construct 50 residential housing units and offer them for sale. The housing units

will balance safety, cutting edge features and a positive atmosphere for all potential investors. These

housing units will be provided with unmatched levels of customer service and attentions, sales are

projected to be very substantial in the first year after the completion of the housing units.

Players in the business:

With the launch of Kenya’ vision 2030 which is a new long term development blue print for the country.

The aim of Kenya’s Vision 2030 is to create “a globally competitive and prosperous country with a high

quality of life by 2030. It aims to transform Kenya into “a newly industrializing, middle-income country

providing a high quality of life to all its citizens in a clean and secure environment.

Consequently, there a few major housing developers in Nairobi but given that there are very many

opportunities in the Real Estate sector makes this proposed project worthwhile.

The Market:

The Real Estate will target three distinct customer segments these are the expatriates, the working class

groups and professionals of various fields.

Prepared by Fred M’mbololo Page 4

Profit Margins and Overheads

We have estimated that £1(Sterling pound) will be exchanged at Kshs150 (Kenya Shillings). Therefore

using the Kenyan Shillings, we estimate that the total sales(revenue) of the sale of the 50 completed

housing units will be sold at Kshs 7,000,000 per unit which amounts to Kshs 350,000,000, which

translates to £2,333,333. We also estimate that the total costs of the entire project to be Kshs

189,050,000 which translates to £1,260,333

Details Kshs

Costs Sub-Total Sub-Total

Total Revenue

7,000,000.00 50

350,000,000.00

2,333,333.33

Cost of Sales

189,050,000.00

1,260,333.33

160,950,000.00

1,073,000.00

£ Converted to £ at

Kshs150 per 1£

Prepared by Fred M’mbololo Page 5

Development Plan:

We intend to recruit at least two Architects and a quantity surveyor to do feasibility studies and come

up with proposed drawing for the housing unit and identify the exact location for the project to take

place. We thereafter hire a construction firm to undertake the construction of the housing units. We

intend to hold monthly meetings to assess the progression of the entire project. We estimate that the

entire project will be completed within a maximum period of two years.

Prepared by Fred M’mbololo Page 6

Business Plan of Real Estates

1.1 Objectives of the Real Estate Investments:

The primary objectives of the organization are to:

To build about 50 apartments for sale within a period of two years.

Become an established and profitable estate organization that’s able to take up new investment

opportunities in Kenya as they become available in the future.

Provide decent housing units for sale and rental

To develop a solid, corporate identity in our specified targeted market area.

To establish a good working relationship and begin working as a team, promoting

communications and suggestions from all participants and stakeholders.

To realize a positive return on investment within the first 12 months after completion of the

construction of the housing units.

1.2 Vision Statement:

The vision of the Housing Real Estate will be to achieve the highest possible standards of the real

estate industry while establishing our agency as the preferred real estate company within our

market area and also in ten years’ time to expand to the neighboring countries

1.3 Mission Statement:

The Real Estate will provide high-quality comfortable saleablel units in Nairobi County. The apartments

units should offer state-of-the-art living conditions reflective of the rapid advancements in technology

and a growing need for quality housing.

The organization will be dedicated to a hassle free living environment in which tenants can enjoy all of

the benefits of safe, attractive and inviting units. The houses to be constructed ideally should have an

edge over their competitors in that they should have broad or Wi-fi Internet connections, a water

borehole, installed stand by solar panels, a good sewage system and other amenities should be with

easy reach such shopping malls, gyms and restaurants.

Whilst maximizing profits will be our ultimate goal, our other primary objectives will also be to maintain

the highest level of customer satisfaction that is achievable. Tenant safety, happiness and comfort will

be our main goals. We will maintain competitive market prices, while working towards expanding the

number of units built and owned over the years thus increasing total profits earned.

Prepared by Fred M’mbololo Page 7

Within the company, we will strive to work as a cohesive, harmonious unit focused on exemplifying our

mission. Just as customer satisfaction will be intricate part of our success, so will employee satisfaction

We believe that employee satisfaction will make the company a success and will be key to our longevity.

The proposed housing units will target the professionals, expatriates and the working class group either

for sale or rentals.

The company will also foster the ideals of the importance of house buyers and tenants needs alongside

with healthy environment, understanding relationships and a professional commitment to satisfaction.

1.4 Target Market:

The Organization will be an enterprise that is involved in numerous aspect of the housing industry.

Primary experience and expertise will be in the development of high-quality, lower cost living for the

working class, expatriates and professionals seeking the most up-to-date technologically advanced living

environment. This project will be relevant in Kenya as we try and meet our Vision 2030 target of

achieving a middle income level status and it will realize the standards of living.

The first 50 completed housing units will be easily sold out to the target market within a period of 12

months and occupied continuously thereafter. Our big dream will be that in five to ten years will be well

established and owning numerous estates across the East Africa region including Uganda, Rwanda,

Burundi and South Sudan.

High profit margins

Well established customer base (potential for business to expand).

The team has sufficient experience and skills to operate business.

Owner is knowledgeable in business management

Good customer relations.

Improved Infrastructure facilities.

Well established Selling Agents and Advertising companies.

Major customer segment is unaware about the product.

Information gaps exist. Updated information on technology and credit facilities (Revolving Fund)

is not readily available to all potential clients.

Prepared by Fred M’mbololo Page 8

Regular needs assessments are not done.

Delays in process application and registration of business.

High capital layout & transaction costs

Opportunity

Increasing demand for the services.

Few numbers of Competitors in the Market.

Market is expandable, demand of the product increasing day by day.

Qualified consultants are available and have expressed interest in monitoring and evaluation of

The sound political, commercial & social setting of our country has and instilled a confidence in

suppliers, investors, lenders and insurers.

Someone who is financially strong may enter the industry.

Excessive Business Regulations.

Increase in taxation or re-introduction of the capital gains tax.

Economy recession or Stagnation.

1.6 Start-up Financial Summary notes:

The total start-up expenses will include legal, stationery, architect, brochures, consultants, insurance,

rates, land, construction costs, land, stamp duty and legal fees, machinery and equipment.

Initial cash will be needed to handle the architect and contractor fees prior to opening, additional cash

will be needed to pay for government regulations.

We will finance growth mainly through cash flow. We recognize that this means we will have to grow

more slowly than we might like.

1.7 The People Needed:

A team of working people will be required we will need at least two qualified architects to draw up the

proposed housing unit, a construction company to hire for period of construction, a quantity surveyor

and an accountant to estimate the entire cost and time anticipated to complete the project. We will

need a secretary and a few messengers to send around. This team will eventually take over the running

of the business.

Prepared by Fred M’mbololo Page 9

1.8 Sales Strategy:

An attractive brochure is an important marketing tool. Relatively inexpensive brochures need

to be developed to provide information about your type of experience, unique features,

location, bathroom arrangements, and getaway aspects, rules, nearby restaurants and

recreational activities, and sightseeing ideas. We will make sure the brochure fits into a

business envelope, is rack size (approximately 4 inches wide by 9 inches long), and has good rack

visibility. Be very careful to select images and words that will represent your proposed business

in an accurate and inviting manner.

We will aggressively pursue opportunities for stories in newspapers and magazines. Media

coverage is very important for new housing units. We will send regular news releases to

national, radio and television stations.

TV and radio appearances describing the uniqueness of your business can be extremely

effective. We will also consider contracting with a freelance writer to develop articles.

To objectively evaluate our property and its architecture, imagine that you are a tenant/house

buyer, looking for a nice place to live or a decent house to buy.

About your business for submission to regional newspapers. Some newspapers have a weekly

calendar and tourism section that lists the area’s new accommodations.

We will occasionally use the selling and letting agency to market and collect revenues on our

behalf and pay them standard commission percentage charges.

Develop a website advertising all our products and services also use face-book and twitter

accounts to get new potential clients.

Advertising in the yellow pages magazines and other real estate magazines.

Advertising on Billboards and Daily Newspapers

Prepared by Fred M’mbololo Page 10

1.9 Profit Margins and Overheads:

Business Plan of 50 housing Units Cost of Construction

Details Kshs Costs Sub-Total

Cost of Land

Land Cost 80,000,000.00

Stamp Duty 4,000,000.00

Legal 300,000.00

Misc 10,000,000.00 94,300,000.00

NCC Costs & Approvals

Land Rent & Land Rates 1,000,000.00

NCC Plan Approval - Architectural 500,000.00

Occupation Certificate

Reinstating Charge-Water

Road Plan Approval

Sign Board Approval

Storm Water Planning

Street Lights Planning

Structural Planning

Consultancy Fees For Plans 2,000,000.00 0.00

3,500,000.00

Professional Costs

Prepared by Fred M’mbololo Page 11

Architect - 2,000,000.00

Quantity Surveyor - 1,000,000.00

Structural Engineer 3,000,000.00

Electrical Consultant 1,000,000.00

Nema 1,500,000.00

Change of Use 500,000.00

Sub-Division

Golden Terrace

Knight Frank

9,000,000.00

Civil Works Drawings & all Approvals

Surveyors: Include

Liaising with City Council & Lands

Debt & Survey of Kenya

Obtaining individual Deed Plans 750,000.00

K.P.L.C Service Line 1,000,000.00

Water service Line 500,000.00

1,500,000.00

Legal Costs/Stamp Duty

Legal Cost on Sale 3,000,000.00 3,000,000.00

Sales & Marketing 20,000,000.00 20,000,000.00

Construction Costs

Costs 50,000,000.00 50,000,000.00

Finance Costs 2,000,000.00 2,000,000.00

Misc. 5,000,000.00 5,000,000.00

Gross Total Costs 189,050,000.00

Prepared by Fred M’mbololo Page 12

Business Plan of 50 housing Units

Sale of the Construction Houses

Sales No of units Total Revenue

Less Cost of Sales

Converted to £ at Kshs150

Prepared by Fred M’mbololo Page 13

The above current valuation are based on the current prevailing market rates which have been

extrapolated from a current ongoing project , the estimates are further adjusted by an Inflation Rate of about 14%

1.10 Important Assumptions:

We assume that the economy will continue growing at about 10% per annum for the next five years

We assume that the taxation system will remain largely the same.

We assume that the level of political stability will continue in the foreseeable future.

The Inflation rate will not exceed 14% for the next five years 2.0 Reasons to Invest particularly in the Housing Real Estate: Housing and Urbanisation: Given the current demographic trends, Kenya will be a predominantly urban country by 2030. The country must, therefore, plan for high quality urban livelihoods for most of her people by that date. The 2030 vision for housing and urbanization is “an adequately and decently-housed nation in a sustainable environment.” This will be attained through:

better development of and access to affordable and adequate housing;

enhanced access to adequate finance for developers and buyers;

pursuit of targeted key reforms to unlock the potential of the housing sector;

initiation of a nationwide urban planning and development campaign, starting with Kenya’s major cities and towns.

Prepared by Fred M’mbololo Page 14

I got this idea from a friend who works for a real investment company that just buys land, construct

houses and then sale them off for profit. Given that there is no capital gains tax presently in Kenya, the

company makes super profits in such engagements.

2.1 Kenya’s General Prospects

Perhaps the best summary of Kenya’s prospects is that they are as bright as Kenya chooses to make

them. While this could apply elsewhere, it is particularly apt for Kenya, given the country’s enormous

advantages. Kenya has a strategic location, a port and a coastline, a broad manufacturing base, the best

business infrastructure in the region, an able and enterprising workforce, and excellent resources for

agriculture and tourism – the list is not endless, but it is long. The challenges to be met are

serious but hardly insuperable. An investor with an interest in any of the major opportunity areas

mentioned above would be most unwise to ignore the potential of a country that is working hard to

renew itself and strengthen its status as a regional powerhouse.

Prepared by Fred M’mbololo Page 15

Prepared by Fred M’mbololo Page 16

2.2 An Overview of the Kenyan’s Vision 2030

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How to Start a Real Estate Business in Kenya [Full 2024 Guide]

If you want to learn how to start a real estate business in Kenya, we made this guide just for you.

We have prepared a detailed step-by-step process that you can follow and get your business up and running in no time.

But before we dive into the details, let’s start with the basics.

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The Basics of Real Estate Business in Kenya

The real estate business in Kenya is quickly booming as more investors find it to be one of the most profitable passive income investments.

It will require a lot of effort and time on your part, but we believe it is worth it.

So, what exactly is a real estate business?

What is a Real Estate Business in Kenya?

In a broader sense, a real estate business involves the buying, selling, management, investment and operation of buildings and lands. However, real estate may also refer to other assets and natural resources that are either below or above land.

These include crops, water, and minerals.

To narrow this down for you, think of the real estate business as an umbrella term for different types of businesses that work in the real estate industry.

These include:

• Property management
• Construction companies
• Real estate brokers and agents
• Home improvement companies
• Property development companies, etc…

All the businesses mentioned operate in one of two ways: by leasing or selling properties to either individuals or corporations. Depending on the business you choose, you will have to follow a slightly different strategy when setting it up.

For example, property management businesses only lease the properties they manage, while brokers and agents usually get paid when they sell a property.

For the sake of keeping this guide simple, we will be focusing on the rental/selling and land aspects as they are more common in Kenya and easy to set up if you have the right resources.

Renting or leasing a property is simply renting out a house, apartment, office, etc., to a tenant on a contract.

The tenant pays you a monthly fee or rents for the right to live in or use the property until the contract expires or as long as they want.

Is the Real Estate Business Profitable in Kenya?

Yes, the real estate business is profitable in Kenya. One of the reasons why a real estate business has high-profit margins is inflation. This is where the price of your property increases over time.

For instance, if you buy a property now and sell it in two or three years, the price will be much higher.

For example, did you know that the house you live in is likely worth double or even triple what you purchased it for?

That’s because every year, the value of properties goes up. This has to do with inflation and other factors.

This is why it makes a lot of sense to invest in real estate as you can buy a property at one price and sell it for a higher price in a few months.

There is also a higher demand for rental properties in Kenya.

There are several reasons why the demand for rentals in Kenya is so high:

• People Are Moving to Urban Areas – As people continue flocking to urban hubs, they will need somewhere to live. Therefore, the demand for housing is on the rise, especially in major cities like Nairobi.
• The Population Is Rising – Although it’s impossible to tell how many people are moving to urban areas at any given moment, another important factor here is Kenya’s ever-rising population which has now reached over 50 million. This means that there is even less land for people to build houses which forces them to resort to rentals.
• Kenya’s Unemployment Rate – The unemployment rate in Kenya is pretty high at over 7%. This means that there are a lot of people who need somewhere to live but have no income to buy or build a home. This makes renting a sensible option for them as they can pay monthly or weekly instead of upfront in lump sum cash.

So, in a nutshell, you can make money from your real estate business in Kenya in one of three ways:

• Through inflation
• By earning income through renting
• By selling or flipping properties ( a little different from inflation)

What are the Benefits of Starting a Real Estate Business in Kenya?

There are many benefits to starting a real estate business in Kenya.

The most obvious one is that you will be earning good money which makes this business a great way to build wealth and accumulate assets.

However, money is not the only thing you will get by starting a real estate business in Kenya. Here are some other benefits:

• Networking Opportunities – When you have a rental property, you will have tenants coming and going at all times. In fact, since most people rent housing before buying homes, you might even have the same tenant for years on end. This means that you can build relationships with your tenants which will lead to opportunities down the line if they want to buy a house or need other services from you such as insurance, financing etc.
• A Sense of Accomplishment – The real estate business is considered one of the best investments in Kenya. So, when you successfully establish your own business, you feel a great sense of accomplishment which might help you expand your business even more.
• A Safe Investment – As Kenya’s inflation rate is still high, owning property makes for a safer investment than other forms of assets/income which have lower returns over time.
• Tax Advantages – In addition to being a safe investment, investing in real estate also has many tax advantages as depreciation and capital gains can be used as tax deductions by landlords under the Income Tax Act.
• You can Evict/Terminate Tenants Easily – Since you own the building, you have the right to evict tenants if they break their lease and stop paying rent or cause damage to your property which means that you can easily manage losses.

Steps to Starting a Real Estate Business in Kenya

• Decide How You Want to Invest
• Conduct In-Depth Research
• Create a Good Strategy
• Create a Real Estate Business Plan
• Organize Your Finances
• Register Your Business
• Come Up With a Marketing Strategy
• Form An LLC
• Build A Support Network

STEP 1: Decide How You Want to Invest

As we already mentioned, a real estate business comes in different forms. So, the first logical step would be to decide which model you want to go with.

• Invest in a property (buy or build) and earn rental income (multi-family houses, apartments, single houses etc.)
• Buy a property, hold on it, and sell it later (taking advantage of inflation)
• Buy under-construction or completed homes and sell them for an increased price (real estate flipping)
• Create your own business by buying land and then selling it later on when it increases in value (this is usually called ‘land banking’)

These are basically the most common forms of real estate investments in Kenya.

Let’s quickly go through each method to help you pick one that is the best fit for your investment portfolio .

Note: It is absolutely okay to use different methods if you have the financial muscles to do so.

Method 1: Invest in a Rental Property

This model makes the most sense, especially if you want to earn monthly returns for a long time.

You can do this in one of two ways:

• Build your own rentals from scratch
• Buy ready buildings and rent them out

Renting out a property is fairly straightforward as all you need to do is find a tenant, negotiate the rent amount with them, and sign a lease agreement that outlines the terms of their stay in your building.

In most cases, tenants will find you.

The downside of this method is that there is a huge competition which means that you might have to keep your rates affordable to get many tenants.

Method 2: Real Estate Flipping: Buying and Selling Homes for a Profit

This is probably the easiest way to get into real estate since it takes less time than investing in rental property. The idea here is to buy homes at a low price, do some renovations and then sell them at a higher cost.

As we all know, real estate prices in Kenya are still on the rise. This is why this method has become so popular over the past few years.

There are only a few things you need to do when it comes to real estate flipping in Kenya:

• Find a good property that will sell at a higher price after renovations
• Do all necessary renovations
• Put the property on the market

When it comes to real estate flipping, you need to be very careful and understand the market value of a property before buying. This is because you might buy a property for higher than it is worth only to find out that you cannot flip it for a profit even after renovating.

You will also need to factor in renovation costs when deciding how much to resell it for.

Method 3: Buy and Hold onto A Property

This might sound like real estate flipping but it is not. For once, you don’t necessarily have to renovate the property to boost its value. Also, while you can flip a property in a few days or months, holding means staying with it for several years.

The idea is to wait until the price of a property goes up before reselling. So, basically, this method leverages inflation to make you money.

There are several ways you can hold onto a property:

• Let it just sit there
• Live in it yourself
• Rent it out then sell it later

Whichever method you use, the idea is to sell when the price goes up.

Method 4: Land Banking

This is the riskiest and, at the same time, the most high-reward and popular form of real estate investment.

Here’s how it works:

• Buy as much land as you can afford around an area that has a very solid demand for a specific type of property (apartment buildings, single houses etc.)
• Hold on to that land for a few years and then sell it when the price goes up. The more you hold on to your piece of real estate, the higher your profits will be. That is assuming that the price will also be going up.

You can do this by either buying huge plots or by acquiring parcels of land in a specific area.

The downside of this method is that you need to have deep pockets as well as a lot of patience for your real estate business to grow into something really profitable.

If this sounds too risky, then maybe consider the other options we mentioned above.

In any case, if you do decide to buy land, you need to have a good team of people working for you. This is because holding on to real estate offloads a lot of responsibilities from your shoulders and leaves you with nothing but decisions regarding the overall performance and growth of your company.

Also, there are many scams surrounding land buying in Kenya, so you will need to be careful not to lose your money for nothing. Make sure that you follow the right procedure when buying land and avoid shortcuts at all costs.

STEP 2: Conduct In-Depth Research

Now that you know how you want to invest in real estate, the next step is to do some in-depth research into the market.

This way, you can gauge how much money you need to invest and whether or not it makes sense for your business model.

While a real estate business in Kenya may sound as simple as building properties and waiting for tenants to flock, there is a lot that you need to factor in.

When doing your research, try as much as possible to answer critical questions like:

• What is the available legal documentation?
• How much capital do you need in order to get your business started?
• What are the procedures in acquiring a plot of land in Kenya?
• Do you know how much it costs to start a real estate company in Kenya?
• What fees must I pay when buying a plot of land in Kenya?
• How much does it cost to hire a real estate agent when selling or renting properties?
• Who are my immediate competitors and how can I beat them?

These are just some of the many questions that you will have to answer before getting started in your own business in this market. However, there is a lot more research that you need to do if you are serious about making any real money in this industry.

For instance, if you already don’t know whether you want to invest in rentals, flip properties or buy land, you determine which is more suitable for you while doing your research.

You can also look into the pros and cons of each method and whether you want to focus on just one or several.

Find out how strong the demand is in your area of choice and whether this demand can be met with what you have to offer.

You also need to look into the local competition that’s already available in the market and whether or not they are a direct competitor to your business model.

Investing in real estate in Kenya can be a lucrative business but it requires a lot of research and patience. If you think you can handle both, then this might be the way for you to go.

STEP 3: Create A Solid Real Estate Business Plan in Kenya

Without a business plan, you will not know how much money you need to start your own real estate business or what to expect for your first few months in operation.

The kind of real estate business plan you write will depend on the size of your business and whether you will be seeking outside financing or not. If you will be using your own money, you can simply come up with a detailed roadmap of what you plan to do while building your business.

In a nutshell, a good business plan should include:

• An overview of the Kenyan market and where it stands right now
• Detailed research on the real estate industry in Kenya
• An analysis of your competition and their strengths and weaknesses
• A list of all the possible expenses that you may incur when starting a real estate business
• The fees that you will charge for your services
• Your potential lead sources
• How much money you need to invest

In general, this is how you should look at your business plan, even if you are just beginning to look into real estate in Kenya.

If your plan is weak, it will only be a reflection of your business and its ultimate failure.

And while a business plan is important, you don’t have to dive into too many unnecessary details.

Just give the basics and take off from there.

Once you have all this information in place, the next thing that you need to do is to start putting down your action plan. This is especially true if you just want to build one rental property or buy land as opposed to starting a massive real estate empire.

On the other hand, if you need a business loan or angel investors, you might need to provide details such as financial projections and your investment milestones.

Understand this, it is very common for potential investors to ask for such information and, if you don’t have them ready, you might scare them away.

STEP 4: Organize Your Finances

Having a good business plan is not enough if you don’t have the financial resources available at all times for your real estate business.

Of course, if you have already written a detailed business plan, you know how much you might need.

However, if you haven’t, let’s give you a rough estimate.

How Much Capital Do You Need to Start a Real Estate Business in Kenya?

You will need at least KSh 5 million to start a real estate business in Kenya if you are simply buying plots or properties. Of course, the value will vary greatly depending on a number of factors. This is merely a rough estimate and might be accurate for some people and way off for others.

So, to get a better idea of how much you will need to start a real estate business in Kenya, let’s look at the factors that will determine these costs.

They include:

The Business Model You Choose

The location of your business, the size of your real estate business.

One of the main factors that will greatly inform how much you need to get this business going is the business model you go with.

In this case, we mean the three methods we discussed above. These are:

• Building or buying rental properties:
• Flipping properties
• Buying land

The first option is probably the most expensive. If you will be building your own properties, you will likley spend a lot depending on:

• The size of those properties
• Where you source your building materials and prices at the time of buying
• Labor costs
• Local regulations on building and construction
• Whether or not you will need to buy land

On the other hand, if you are buying a rental property, the cost will depend on the newness, demand in your area, and size of the property.

Flipping will be a bit cheaper since you will be buying older properties. But again, the prices will vary depending on the:

• The area you are located
• Property demands
• Size of the property
• Age of the property
• Accompanying resources such as the extra land.

Before buying properties with the intention of flipping, ensure that you are not getting ripped off and that you will be able to turn a profit after renovations.

Buying land is straightforward and the cheapest of these methods. The cost of the land will vary depending on:

• The size of the land – The bigger the land you want the bigger the price
• Demand for the land – The more people want to buy the same piece of land, the higher the price will be.
• The location – You can buy a plot of land for less than 500k in rural areas and up to 5 million in urban areas.
• Surrounding amenities – Land closer to towns or learning institutions might be pricier

Another important factor is where you intend to set up your business.

If you are going to build a real estate empire in Nairobi, it will be much more expensive than if you were to do so in Mt. Elgon or the rural areas of Turkana.

This is because land in Nairobi is probably much more expensive than anywhere else.

The size of your business will also determine how much you need in terms of capital. This is because the larger your business, the more money you will need to run it.

If you are just buying a few plots and constructing some rental properties, then the amount that you need to invest might be fairly low when compared with the amount that you need to invest if you were to start a massive real estate empire.

Where to Get Money For Your Real Estate Business in Kenya

Once you have an idea of how much money you need to start a real estate business in Kenya, you will need to start looking for ways to raise the funds.

Of course, this means that there are two options you can work with:

• Take a loan
• Use your savings

If you are going to borrow from a bank, the amount that you need will depend on how much you want to invest. In other words, if you want to build more of an empire, then you might have to take a larger amount.

On the other hand, if you just want something small, you might be able to borrow a smaller amount.

If your goal is to take a loan from a bank or any other financial institution, it might require that you have a good credit history and a solid real estate business plan.

On the other hand, if you are going to use your savings for this business, then there will be no such requirements.

However, you should be careful about how much of your own savings you put into this business.

Again, the amount that you need to invest is also dependent on the model of your business and where you plan to get started.

It will also depend on how long you intend to run this business and if you are planning on expanding it.

Once you have managed to raise enough money, you can now start looking for land and start building or investing in properties depending on what model of business you want to go with.

STEP 5: Register Your Business

Just a while back, the Kenya Revenue Authority (KRA) introduced a geo-mapping system to help them catch landlords who fail to remit taxes.

This means that now more than ever, it is very important to legally register your real estate business to avoid accumulating millions in taxes.

So, how do you do it?

While you might be required to submit some different documents, the process of registering all types of businesses in Kenya is ideally the same.

Let’s show you how…

How to Register a Real Estate Business in Kenya

The procedure of registering your real estate business in Kenya might vary from county to county but it’s mostly the same. If you don’t want to go through the hassle yourself, we recommend that you hire a lawyer who is qualified to do so.

In order to obtain a certificate of registration;

• You must be at least 18 years of age
• You have to register with the lands registry in Kenya
• You have to provide proof of real estate purchase
• You have to provide proof of finance to invest in a Real estate business
• You might have to appoint a Kenyan lawyer to act on your behalf if you are a non-resident

These are just some of the conditions you will have to meet but there might be more.

Now, to register your business name and obtain a certificate, you can check out this in-depth guide on how to do exactly that.

Note that these are general guidelines for registering a business name in Kenya and is not specific to real estate. But don’t worry, the process won’t be much different.

STEP 6: Come Up With a Marketing Strategy

Depending on how you plan to attract clients, you will need to come up with a marketing strategy.

If you are going to look for clients online, you will need to create a website and other online platforms that will allow potential clients to get in touch with you.

If you are going to be working offline, it might not be as expensive because the only cost here would be putting up a few billboards and flyers around your area of interest.

The success of this business will depend entirely on how effective your marketing strategy is and it should be designed in such a way to attract quality clients.

Ways to Promote Your Real Estate Business in Kenya

Here are some ideas on how to get your real estate business in front of the right clients:

• Make sure you are available on all the major social media platforms
• Make sure that you have a good online presence via your website and other platforms.
• If you are interested in marketing on billboards, it will cost some money but it is an effective way of promoting your business.
• You can also promote your business by sponsoring some local events or even offering free services for companies within the same industry as you.
• Invest in a good photographer. A good photographer is crucial for this business because you are going to have clients who are looking to buy or rent a property and they will need some visual aids. This means that photos of the houses, rooms and other properties will be required.
• Make property images on your website easily shareable
• Make sure your real estate images also cover the local area so that prospective clients can clearly see the neighbourhood.
• Make it easy for clients to contact you
• Create videos to provide a virtual tour of your properties. Clients love that.

And so on…

STEP 7: Build A Support Network

A support network is basically a group of people or contacts that you can rely on when things get tough.

This is especially essential for your business when you are just starting out because it will help to take some burden off your shoulders and this, in turn, will allow you to concentrate on expanding your business.

When choosing a support network, make sure that the people you choose are going to be of help. You can choose from your family, friends or even workmates depending on what you feel is most appropriate for you and the business.

The best part about having a support network is that they will always be there to encourage you and provide assistance when things get tough.

You will also have people who will be able to give you advice and mentor you when needed.

Examples of people who can help you with your real estate business include:

• Former schoolmates
• Current or former coworkers
• Family members
• Business associates
• Online forums

Once you have chosen your network, make sure to maintain proper relationships with them because it will be beneficial for both parties in the long run.

BONUS STEP:

Get a Good Accountant and Attorney

When you are starting this business, the accounting aspect is very important.

This is because you have to keep track of all your expenses and revenue so that you know whether you are on the right financial track or you are doing something wrong. Keeping tabs on your finances will also help you pay taxes on time and avoid issues with KRA.

Your accountant should be good with numbers so they can help with the proper recording and reporting of all your expenses and revenue.

Your attorney will come in handy when you need to draft contracts, agreements and other legal documents pertaining to this business.

When hiring an attorney, make sure that he or she is licensed to offer these services and has some experience in the real estate business.

The Bottom Line

After reading this article, you should have all the information you need to start your real estate business in Kenya.

If you want to succeed, it is important that you learn more about this business and get as much experience as possible.

The best thing about starting a real estate business is that anyone can do it regardless of their background or experience.

As long as you have the drive and determination to succeed, this business will be a good choice for anyone looking to get into it.

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L.K. Nathans

I am a personal finance enthusiast and digital marketer. My work here is to help you navigate your financial journey and achieve your main money goals. Through Omoka Digital, I provide practical tips, strategies, and insights on budgeting, saving, investing, and debt management. My aim is to empower you with the knowledge and tools you need to make informed financial decisions and improve your financial well-being.

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Stay connected, how to start real estate business in kenya.

This article will give tips for starting your real estate business in Kenya .

Real estate development is a lucrative investment option for entrepreneurs who don’t want to invest in unfamiliar areas.

Kenya’s economy has been on the rise, and now may be one of the best times to start this business, as there are still many undeveloped areas that you can cash in on.

How to start a Real Estate Business?

The following tips will guide you in starting a real estate business in Kenya.

1. Research

Before starting any business, you must research and determine if this field is lucrative and what your target market is. For more information, you can conduct surveys or talk to experienced entrepreneurs who may have started something similar before.

2. Have a strategic business plan

Once you have done your research, now is the time to draft a business plan . This plan will include details of how you will start the business, management structure, capital requirements, and other things related to creating this type of business.

A business plan will guide you in starting a business and answer some problems or questions that may arise while running this business.

3. Build a unique brand ​you can be proud of

Having a unique brand that people identify with is essential to success. Many real estate businesses that have been successful in Kenya, like Nyayo Estate and Brookside Investments, started as small-scale ventures and eventually grew into large corporations due to the trust they built for their brands.

4. Legally register the business

It would help if you got your business legally registered before starting the operations. The registration will give you legitimacy when dealing with clients or investors and help identify who owns the company if anything happens that requires legal responsibility.

5. Raise the required capital to start the business

Many investors even look at the capital requirements to start a business before investing in it. The amount of money you will need to create this type of business may vary depending on factors like:

• The number and size of properties that you want to buy for your project
• How much is each plot going to cost
• The size of the office that you want to rent.

You may start this business with as little as Kshs100,000 if you look for low-budget properties. It would help plan how much capital it will require before starting the real estate business in Kenya.

6. Market your brand and the business

Once you have registered your business, you can now start marketing it. This process includes creating a website for your business or advertising through social media platforms like Facebook or Twitter. You can also put up posters around town to inform people about what type of property you deal with and how they can contact you if they are interested in buying any of them.

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How to Start a Real Estate Business in Kenya

by Joy Gathirwa | Oct 19, 2022

The Kenya real estate industry is growing in leaps and bounds. This is evident by the many buildings coming up as standalone homes, or gated communities. What’s more, there are many advertisements on owning a piece of land even in far flung corners of the country. Whereas most Kenyans still cling to the traditional ways of investing, there are other modern ways of owning real estate without having land.

Starting a Real Estate Business

1. do market research.

Going blindly into a business is a surefire way of failing. You need to first sit down and research the different real estate options available in Kenya . What’s more, you have to know what legal barriers you need to overcome.

Research can be done using books, newspapers, or magazines. But a much easier way is visiting websites of real estate firms and reading their blogs.

2. Write an in-depth business plan

Since real estate investment requires large sums of capital, a business plan helps in convincing other investors or financial institutions to fund you.

Granted, a business plan is also a roadmap to meeting your real estate goals. Furthermore, it helps people get to know what you actually do, and how you earn money.

3. Create an eye-catching name

Because of the competitive nature of this business, you need a strong brand name, especially one that is memorable. The name should sound serious enough in order for people to take you and your business seriously.

A good brand name actually creates trust and confidence in your business. That way, customers can easily recommend you to their friends and even family.

4. Raise the start-up capital

Having done the initial research, you have an idea of how much capital you need in order to successfully start a real estate business.

One way of raising capital is through your savings. However, most times savings fall short, especially after doing branding and doing research.

The other ways you can raise capital is by approaching a bank for a loan if you have collateral. A cheaper way is to pull resources with other like-minded investors.

5. Create a stunning website

With one out of two Kenyans owning a smartphone, your online presence is as important as word of mouth.

On your website they’ll not only see your brand name, but they’ll see the contact details. What’s more, your social media handles will be visible for one to share property details.

In addition to that, you can add photographs of property followed by detailed description to make your work of sifting through easy.

Real Estate Options In Kenya

Having looked into how to start a real estate business , here are the real estate business options available;

1. Land owner and Landlord

The process of buying and owning land in Kenya is seamless. Once you have bought the land legally, you can either choose to lease out the land, or build property for rent. If you choose to lease out land, simply visit a lawyer and have a lease agreement drawn. The lessee has to sign the agreement.

If you decide to build rentals, you can now become the landlord. This means you now collect rent. However, before building a rental, you have to acquire a building permit from the local government of your area.

• You own all income received if you didn’t use a loan facility to build the rentals.
• You are guaranteed financial freedom for the rest of your life.
• Rent for houses usually goes up depending on certain factors.
• Tenants sometimes delay making payments.
• Some tenants damage the houses forcing you to pay for repairs.
• Tenants can pull out of an agreement due to unavoidable circumstances.

2. Property manager

Landlord’s sometimes employ property managers to collect rent on their behalf. If you want to be a property manager, you need to have the know-how in real estate business and laws.

In addition, you must have a certain amount of money in your account to pay the landlord in advance. This now leaves you in charge of collecting rent from the tenants.

This career requires you to be a member of the Kenya Professional Realtors Association.

• It’s a simple business to start once you’ve done your research well.
• Depending on the agreement with the landlord, you can have a substantial amount of profit.
• If you are managing several properties, this can create income into the unforeseeable future.
• You have to deal with some stubborn tenants.
• If you evict a tenant without following the law, you might end up in court.
• Property can remain unoccupied for a longer period of time.

3. Real estate agent

Selling of land and property can be a rewarding career if done the right way. Here, you advertise property on behalf of individuals or tenants. The property can be land or buildings.

However, you need to be a member of the Kenya Professional Realtors Association of Kenya to overcome legal challenges in the profession. What’s more, you have to be certified and licensed by the Land Registry in order to operate.

• Selling land and property can be a lucrative career.
• You get to visit the whole country while selling property.
• It’s easy to learn the ropes in the industry thereby you can make a good investment option.
• It’s full of con artists and a dangerous industry.
• If you fail to register as a member of KPRA, you won’t get help in case of legal challenges.
• You need to be well-versed with the legal aspects of selling property.

4. Property developer

This is among the most lucrative businesses in the Kenyan real estate industry. It involves purchasing land in different parts of the country before selling it.

However, prior to selling the land, a developer needs to add value to the land. What’s more, a developer has to develop a building design, market the property, and even obtain government approvals and licenses.

And if that’s not all, a developer needs to be a registered member of Kenya Property Developers Association.

• Land sells like hot cake in Kenya.
• Most Kenyans have started appreciating value-added land and even controlled developments.
• You can live a stress free life financially if you do it right.
• Opportunities to travel countrywide are unlimited.
• Getting relevant government approvals and licenses can be cumbersome.
• The industry is riddled with corruption.
• It’s a capital intensive business to start.
• Crooks and con artists can sell you disputed land or road reserves if you don’t exercise due diligence.

5. Real Estate Consultancy

A real consultancy is another business option you can invest in without owning land. Just like an agent or agency, you first have to have a valid registration certificate to work without legal hurdles and build a reputation.

This also means that you need to have an office and staff. You’ll be advising clients, in this case real estate developers , property developers, and even lenders, as far as real estate transactions are concerned.

• You are your own boss.
• After you have built a reputation, it is easy to land lucrative deals.
• It’s an exciting career that can make you land interviews with leading TV stations.
• Building a reputation can take years.
• It requires a lot of capital to start.
• Working as an own boss can mean long hours in the field as you look for clients.
• You need the right documentation in the form of certificates and licenses to operate.

6. Real estate blogger

Because most Kenyans have moved online, searching for real estate property is now done using technology. This has presented the opportunity for blogging on property issues for different real estate websites .

If you are good with research, a wide knowledge of the real estate industry, and the right writing equipment, you can become a freelance writer.

• Your work is mostly remote, so you create your own schedule.
• Travelling throughout the country doing interviews is exciting.
• If you freelance, you can work for several websites at a time.
• It gets tiring working from home.
• The cost of good writing equipment can be expensive.
• At times, you end up footing your traveling expenses as you conduct research.

7. Real estate TV program producer

Another lucrative real estate business option is starting a real estate TV programme.

All it requires is the right equipment to shoot, authority to do video shooting in different properties, and vast knowledge in the Kenyan real estate industry.

What’s more, you need a great team who know exactly what they need to do.

• It’s very lucrative.
• You get a chance to visit stunning architectural buildings around the country.
• You meet and interact with people in the high social classes.
• It helps you add to your knowledge in the real estate industry.
• It’s expensive to have the right equipment and recruit staff.
• Since the career is highly competitive, convincing a media house to air your programme is not easy.
• Producing a TV programme is time consuming.
• You need relevant permits to shoot in some areas, or you risk arrest and prosecution.

With the above real estate investment options, you can be fully armed before you start your own business in Kenya. Whereas most are straightforward, others require you to gain legal approval before embarking on the project.

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How to Start a Real Estate Business in Kenya

The real estate business is one of the most profitable ventures for entrepreneurs in Kenya. The sector has experienced tremendous growth in the recent past due to urbanization and an increase in population. The demand for residential houses, raw land and office spaces is always rising. This has created business opportunities for entrepreneurs who want to meet the growing demand.

If you want to venture into the real estate business in Kenya and make good profits, it is important that you first decide on the type of real estate you want to invest in. This is how you can start a real estate business in Kenya.

Conduct a Thorough Research

Like any other business, it is important to conduct thorough research before starting your real estate business. Research real estate properties available before choosing a niche to invest in.

Decide on the Real Estate Properties to Invest in

Some of the best real estate properties to invest in Kenya include:

• Your own home. The first step for venturing into this business is to build your own home. A home is a good investment because it has monetary value and can be used as leverage when seeking loans from financial institutions. You can even decide to sell it later on when its value appreciates.
• Commercial investments. With many businesses coming up, they will need space to carry out their activities. As such, you can put up property and lease it to business outlets.
• Residential houses. With the growing population, most Kenyans are in need of houses and many more will still need home. It is for this reason that residential property remains one of the most lucrative real estate investments.
• Raw land. Many investors are currently investing in raw land (land with no development). If you want to make good money from this investment, watch out for catalysts that will allow you push up the price of land when selling it (catalysts can be external developments like roads, hospitals, etc.)
• Industrial property. Industrial property includes warehouses, depots, distribution centers, and other property set up for industrial purposes. Industrial property requires smaller capital to set up.

Write a Real Estate Business Plan

After doing thorough research and deciding on the real estate niche you want to concentrate on, draft a business plan. The business plan should include details of how you will start the business, capital requirements, your marketing strategy, business management structure, your business location and potential market and competitor analysis. 

Read more: How to write a business plan. 

Find a Strategic Real Estate Business Location

One of the factors that greatly determine the success of your real estate business is finding the ideal business location. From the research you conduct at the beginning, find out the areas where people want to set up businesses. As such, you will know the ideal location to put up your commercial property. Other factors to consider include urbanization and security.

If an area is well developed; has social amenities like hospitals, schools, and a good transport system, people will want to rent houses here, giving you an opportunity to build rental houses around such areas. In the same way, people will want to live in safe environments. You do not want to be stuck with a rental property that no one is willing to occupy. It is also important to look at market saturation. If an area has many vacant houses, do not set up a rental property here. Look for areas with a growing population.

Raise the Required Capital for your Real Estate Business

Every business requires capital to start. The amount of money you need to start a real estate business will vary depending on the nature of your business; the niche or real estate investment option you decide to venture into.

Factors that will determine the amount of capital you need include the number and size of properties you want to invest in, the cost of land, office space size, etc. For example, if you want to buy property in Kenya through a bank, most banks in Kenya will require at least 20% - 30% of the value of the property as down payment.

Related: How to sell land fast in Kenya.

Build a Brand for your Real Estate Business

It is crucial that you build a brand that potential customers will identify with. Look for a good business name that is easy to remember. Many successful real estate businesses in Kenya started to build brands from the early stages of their businesses. Some of the best real estate companies in Kenya include Knight Frank Kenya, Villa Care Limited and many more.

Register your Real Estate Business and Get the Necessary Permits and Licenses

It is important that you first register your business before you start any operations. A business that is not legally registered will put off clients. No one wants to buy a house from an owner who is running a business that is not registered. In this case, you will need a real estate certificate. To obtain this certificate you must fulfill the Kenya’s instructional specifications and Restrictions on Access to Property.

Related: How to make money in real estate in Kenya.  

Market your Real Estate Business

Once your business is set up and legally registered, you need to have a perfect marketing strategy in place. Your potential customers need to know that your business exists. You can create a real estate business website for marketing or market your business on social media platforms like Facebook, Instagram, or Twitter.

Alternatively, you can distribute pamphlets and flyers or put-up posters in public places. It is important that you develop different channels through which potential customers can reach you. It can be through email or phone.

Read More: Sales and marketing strategies for small businesses. 

Manage your Real Estate Business in Kenya

Once you set up your real estate investment, the race does not stop there. You will need to manage your properties. Property management involves handling tenancy leases, inspecting your property and making renovations in good time, collecting monthly rent, screening of new tenants, sending late payment and eviction notices, arranging for payback of deposits after a tenant moves out, and more. If you do not have the time to do this yourself, you can hire a property management agent.

Real Estate Business Returns in Kenya

If you are wondering if real estate is profitable in Kenya, the answer is yes. However, to make huge profits, you will need to get it right from the very beginning. Conduct proper research and work with facts to make informed decisions. Choose the right business location, come up with a good marketing strategy , and manage your property responsibly.

Tips on How to Start a Successful Real Estate Business in Kenya 

To build a successful real estate business in Kenya, you need to do the following:

• Sell genuine land without disputes 
• Offer ready title deeds to buyers 
• Take your potential customers to the land for viewing
• Ensure your business meets all the necessary legal requirements 
• Encourage your customers to do a land search before buying land

Summary of How to start Real Estate Business in Kenya

The real estate business is one of the most profitable ventures to start in Kenya but its good to know that it is not a get-rich-quick investment. It will require hard work and effort to realize the profits that come with a well-managed real estate business. Then identify the right real estate property you want to invest in and get started. 

• How to start house rental business in Kenya 
• Best investment opportunities in Kenya  
• Best investment companies in Kenya

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How to Start a Real Estate Business in Kenya

Posted by KenyaSihami | Jul 29, 2023 | Real Estate | 0 |

How to start a real estate business in Kenya is one of the million-dollar questions we have seen online recently.

The property market in Kenya is expanding rapidly. The proliferation of new condo complexes and gated communities proves this trend. 

Even in remote parts of the country, numerous advertisements touting the benefits of land ownership exist. 

Most Kenyans, however, have yet to realize that there are alternative, modern ways to invest in real estate that do not involve purchasing land.

Table of Contents

1. Investigate the Market

If you dive headfirst into a business venture, you will inevitably fail. Before making any real estate purchases in Kenya, you need to take some time to learn about the market. You must also know the legal hurdles you will need to jump.

Use books, newspapers, and magazines for your research. However, a lot less time-consuming option is to read the blogs posted on the websites of real estate agencies.

2. Come Up With an In-Depth Business Plan

Since real estate investments typically demand sizable sums of money, a well-thought-out business strategy is essential for attracting the necessary funding.

A company strategy can serve as a guide to accomplishing your building objectives. Additionally, it aids in letting others know what you do for a living and how you make money.

3. Come Up With a Catchy Title

The cutthroat nature of the market necessitates a distinctive and easily remembered brand identity. The name must convey that if you want people to take you and your business seriously.

You can cultivate trust and confidence in your company through a strong brand identity. In this approach, satisfied clients will feel comfortable referring you to their friends and family.

4. Obtain Initial Funding

After some preliminary investigation, you have an excellent notion of how much money will be required to launch your real estate firm.

Putting money aside is one option for getting cash. However, there is often a shortfall in savings, even after investing in branding and market research.

You can also ask a bank for a loan if you have collateral, another capital-raising option. Sharing costs with other investors is a more cost-effective strategy.

5. Make a Beautiful Website 

One in two Kenyans now owns a smartphone, so having a solid web presence is just as crucial as word of mouth.

Your brand name and contact information will be prominently displayed on your website. You can also promote your listing by making your social media accounts public.

You can also make the sorting process more accessible by including images of the property and a detailed description.

Kenya Property Choices

Real Estate Options In Kenya

After doing some research on the topic, we present the following real estate business opportunities;

1. The Landlord and Property Owner

Acquiring land in Kenya is easy. After receiving land, you can lease it or construct a rental structure. You must see a lawyer and get a lease agreement to rent the property. The lessee must sign the lease.

You can now enter the landlord business if you construct rental properties. You can now legally charge rent. But before you start construction on a rental property, you’ll need a permit from your city or county.

• You would keep all the rent money if you built the rental property without a loan.
• You will never again have to worry about money.
• Depending on several factors, rent for properties typically increases.
• Sometimes renters need to arrive on time with their payments.
• When tenants cause damage to the properties, you end up footing the bill.
• Tenants can cancel their lease if they experience an unforeseen problem.

2. Supervising Tenant

In some cases, landlords will hire property managers to handle rent collection. Property managers must have expert knowledge of real estate law and finance.

In addition, you need to have a minimum quantity of cash on hand to make a rent prepayment to the landlord. Now it is up to you to collect rent from your tenants.

If you want to work in real estate in Kenya, you must join the Kenya Professional Realtors Association.

• Setting up shop will take little time if you’ve done your homework.
• Profits can be relatively high, depending on the terms of your lease with the landlord.
• If you manage multiple homes, this might be a source of revenue for years to come.
• Tenants can be challenging to work with.
• It’s possible to get sued if you try to evict a tenant without following the law.
• The length of time a property can sit empty is extended.

3. A Property Broker

If done correctly, real estate sales can provide a comfortable living for the seller. In this section, you can post ads for potential buyers or renters. Land and structures alike are fair game.

However, to succeed in Kenya, you must join the Kenya Professional Realtors Association. Moreover, the Land Registry’s approval and license are prerequisites for doing business.

• Real estate sales can provide a comfortable living for the right person.
• Selling real estate allows you to travel throughout the country.
• The learning curve is low, making this a promising field for financial investment.
• The industry is risky and rife with con artists.
• You need to join KPRA to rely on the organization for representation in court.
• You must be familiar with the legal requirements of selling real estate.

4. Developer 

This is one of the most lucrative segments of the Kenyan property market. Acquiring property in various locations to resell is a common strategy.

But before they can profit from the land, developers must increase its worth. A developer must create a building plan, advertise the site, and secure necessary permits and licenses from local, state, and federal agencies.

In addition to these requirements, a developer must be a Kenya Property Developers Association member.

• In Kenya, land is a hot commodity.
• In recent years, most Kenyans have come to respect land with additional value and even carefully planned developments.
• If you manage your money well, you won’t have to worry about it.
• Possibilities for cross-country travel are virtually limitless.
• Obtaining the necessary licenses and permits from the government can be lengthy.
• Corruption is pervasive in the business world.
• The initial investment required is high.
• If you don’t do your homework, con artists and crooks will try to sell you contested land or road reserves.

5. Property Management Advice

Without purchasing physical property, one can start a consulting firm. To operate legally and establish a solid reputation, you must first obtain a registration certificate, just like an agent or agency would.

Having an office and employees is also required. You will be providing advice to clients in the areas of real estate transactions, development, and financing.

• If you want to be your boss, you can.
• When you have a solid reputation, getting large contracts is simple.
• It’s a thrilling profession with the potential for exposure on major networks.
• Reputation is something that takes years to build.
• It’s costly to get going.
• Long hours spent prospecting for customers are a reality for many self-employed workers.
• To legally conduct business, you must have the appropriate certifications and licenses.

6. A property blogger

Because so many Kenyans now reside in cyberspace, property searches are conducted exclusively electronically. Because of this, numerous real estate websites directly provide blogs devoted to discussing various property-related topics.

Freelance writing is a viable career option for those with solid research skills, an extensive understanding of the real estate sector, and the necessary writing equipment.

• You can choose your hours since you do most of your job from home.
• It’s thrilling to go on a nationwide interviewing tour.
• If you’re a freelancer, you have the flexibility to work for multiple clients at once.
• Working from home all day might be exhausting.
• Good writing tools can be pricey.
• When conducting research, you may have to cover your travel costs.

7. Producer of a Real Estate Show for Television

Starting a real estate television show is another fruitful way to enter the industry.

All you need is the required filming gear, the appropriate permissions to film on various properties, and extensive familiarity with the Kenyan real estate market.

You also need a fantastic team composed of well-versed individuals in their roles.

• It can be rather profitable.
• You get to see some of the most impressive works of architecture in the United States.
• You get to know and mingle with the affluent.

It’s a great way to broaden your understanding of the real estate market.

• Investing in the proper machinery and hiring qualified personnel is costly.
• Due to the intense competition in the industry, getting your show picked up by a significant media outlet is challenging.
• The process of making a television show is lengthy.
• In some regions, you need the proper authorization to shoot, or you could face criminal charges.

In Conclusion 

Before launching your company in Kenya, arm yourself with the aforementioned real estate investing opportunities. While the majority are simple, some may necessitate official sanctions before you can move on.

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This is where and how to start a property business in Kenya

How to start a real estate business in Kenya: Investing right in the property business is a skill that takes time to learn but  which, if mastered,  can guarantee you a comfortable life because you will be able to successfully manipulate your assets to get maximum profits. However, a common problem many first-timers have is deciding on the type of real estate they should put their money in.

“We get many clients who have spent the better part of their adult lives savings with the hope of investing in the property sector but when the time comes, they are often unsure how to go about it since they do not fully understand the dynami­cs of the industry,” says Mr Gilbert Kibire, the CEO of Icon Valuers Ltd, a real estate firm based in Westlands, Nairobi.

“There are different ways of making  money when dealing in property,” notes Mr. Kibire’s colleague, Martin Cheboror. “It is up to the investor to choose a niche they are comfortable enough with to sink their teeth in.”

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According to valuer Paul Kiome Matumbi, when deciding on the type of real estate to venture into, you need to consider the location and size of the land, as well as the envisaged profits and the time you are willing to wait to recoup your principal capital.

When deciding on the niche to invest in, it helps if an aspiring investor understands the two ways in which property pays back. The first, current income, refers to the money you will be collecting from your property monthly or yearly as rent after you have deducted all the expenses.

Second, a good investment should also appreciate handsomely with time so that you can always make a considerable profit if you decide to sell it later on. So it is advisable to consider both the expected current income and appreciation rates before entering into a property deal.  However, avoid the temptation to invest in too many areas.

“The most successful investors are those who choose one or two niches and take time to master them,” says Mr. Kiome, the CEO of Nairobi-based real estate firm Prudential Valuers.

Below are some investment options the local real estate market has to offer:

• 1 . Your own home

According to Mr. Matumbi, building one’s home should be the stepping stone to creating a budding real estate portfolio.

“Even the birds of the air and the ants on the ground build their own nests, so why should a human being continue paying rent for the rest of his life?” he wonders.

“A home is a wise investment because even if you do not plan on selling it soon, it still has monetary value and it can be used as leverage when seeking loans from financial institutions. The appreciation aspect of it cannot be ignored because if you decide to sell your home, later on, it will certainly be a worthy investment,” Mr. Matumbi adds.

Even when you don’t have enough money to buy or build your home, consider taking a mortgage. Rent payments go to the landlord’s pockets and at the beginning of the month, one doesn’t have anything to show for it. Mortgages, on the other hand, go towards increasing your equity in your home and in the end you will have a house to show for it.

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“The comfort of having your own home gives you peace of mind that enables you to confidently venture into other real estate investments,” the valuer says.

• Residential houses

According to the National Housing Corporation estimates released last year, Kenya has an annual housing deficit of more than 200,000 units. To ease the problem, 150,000 new units are needed per year. If you decide to spend your money easing this deficit and say, build an apartment complex, you will be making hay while the sun shines.

“Residential property,” Mr. Cheboror says, “is one of the best real estate investments when it comes to long-term income. Even after recouping the principal investment, most developers prefer to hold on to their property indefinitely.”

Noting that residential units are easy to rent, sell and finance, Mr. Kibire says that they can serve as both solid investments as well as personal residences because the investor could decide to live in one of the units.

However, do not let your experience as a tenant fool you that it is easy to manage rental houses. According to Mr. Kibire, some developers end up under-estimating the costs it will take to manage their building.

“Carefully screening your tenants and appointing a competent manager will go a long way in shielding you from losses,” he says.

3. Commercial investments

Mr . Matumbi defines this as putting up property with the aim of leasing it to business outlets. He points out that, with shopping malls now the craze, retail property is proving increasingly more lucrative than residential property. However, he is quick to caution that the sector is not recommended for beginners, unless one has a solid financial base.

To get it right, Mr Matumbi advises, you should approach an anchor tenant for a contracted deal before the construction begins. An anchor tenant, usually a large-scale retailer, is a big business whose presence on your property will draw other commercial tenants.

“Most investors negotiate with anchor tenants so that they (the anchor tenants) finance part of the construction costs. The anchor tenant then recoups  their contribution by not paying rent for a number of years,” he explains.

• Industrial property

These include depots, warehouses, distribution centres and other property set up for use by light industries such as creameries and bakeries.

Mr Kibire points out that industrial property requires relatively smaller capital to set up since their designs are usually not complicated.“Provided you get the location right, they are particularly lucrative because the landlord thrives on long-term leases with a single big tenant, so the problem of defaulting  on rent is minimised,” he adds.

While noting that the minimum period for leasing industrial property in Kenya is five years and a month, Mr Matumbi concurs that it is a viable option for “small” developers because county governments are currently encouraging industrialisation. However, he notes that the bureaucracy involved in change of user and getting the relevant permits can be discouraging. “There have even been cases where, after an investor has got all the relevant permits, local residents have lobbied the authorities to veto the setting up of the industrial property,” he says.

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5 . Raw land

This is just a parcel of land without any development on it. When buying raw land, it is important for speculators to watch out for catalysts that  can work in their favour in pushing  up the price. Mr Cheboror says a catalyst could  be an upcoming external development, most often a road.

Raw land can also be leased or rented to provide cash flow. To get even more from it, you can subdivide it and sell it in smaller units.

Alternative routes

1. The build, operate and transfer method

Sometimes, the owners of prime land find themselves disadvantaged in that do not have enough capital to optimally develop their land. In such cases, Mr Cheboror suggests that the land owners  consider the build, operate and transfer approach. This is where the land owner partners with a venture capitalist who  builds on the land. The two parties then enter into an agreement whereby  the venture capitalist operates the property for a number of years to recoup his investment, after which ownership of the property reverts to the land owner.

Citing a recent report that ranked Nairobi as Africa’s top foreign direct investment (FDI) destination,  Mr Gilbert Kibire, Icon Valuers Ltd CEO, explains that foreign investors are increasingly looking to get into joint ventures with local land owners.

“In foreign markets such as Asia and Europe, capital gain is low and unattractive. Investors from these countries bring their money to Nairobi with the hope of making bigger returns and when they come here, they look for ready land where they can operate for a few years before cashing out and exiting the market,” he reveals.

2. The ‘chama’ approach

“There is power in numbers,” notes Mr Kibire, who acknowledges that his job has made him a member of several chamas that have invested heavily in real estate as joint ventures.

“What I have learnt is that when putting together an investment group, it helps to have a diverse membership, ranging from lawyers to accountants and even real estate agents. This will provide you with a ready pool of crucial expertise and save you a fortune on consultation fees,” he offers.

A good investment group should have a constitution with clear guidelines explaining the methods through which the group plans to invest its money.

He says although disagreements are inevitable in chamas, they should be encouraged since they help forestall risks and assist in critically analysing a deal to filter out bad investments.”

3. Property flipping

Flipping involves buying real estate with the  intention of selling it within a short time (usually a few weeks) for profit. It is a lucrative field but it can be taxing in terms of time and effort as it requires a wholly hands-on approach.

“People have made successful careers out of this highly speculative trade, but bad deals are rampant as well,” says  Mr Kibire. To avoid bad deals, he advises those getting into the flipping business to begin with the end in mind.

“We teach our clients the principle of making profits before they even buy the property. With flipping, you need to have an idea as to whom you’ll sell the property to before you even buy it,” he explains.

To reap maximum financial gain from flipping, an investor needs to understand the imperfect nature of the property market. While an investor can find a land owner willing to sell his land for Sh2 million shillings, he or she can resell the same land for Sh5 million the very next day.

Speculators should consult with real estate valuers to determine the highest amount for which they can dispose of their property.

4 . Wholesaling

In real estate circles, wholesaling refers to the practice where a speculator spots a real estate deal and enters into a binding contract to acquire the property from the seller after putting down a little or no money at all. The speculator then sells the contract to another buyer. The difference between the contracted price and the amount paid by the buyer constitutes the wholesaler’s profit.

A vital tip for a wholesaler is to add a clause in the purchase contract that allows him  or her to back out of the deal if he cannot find a buyer by a certain date.

According to Mr Matumbi, the practice is gaining momentum with houses that are selling off-plan, with speculators only committing to buy the property and then hunting for buyers as the property comes up.

Wholesaling can be a great way for those with limited capital to gain entry into real estate.

This feature was first published in the Daily Nation .

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